Shanghai Stock Exchange Issues Warning Letters to Eplus3D and CITIC Securities Three Months After IPO Withdrawal

Shanghai Stock Exchange issued regulatory warning letters on June 29, 2026, to Eplus3D (Hangzhou Eplus3D Technology Co., Ltd.), three of its senior executives, and two CITIC Securities sponsors, three months after the company withdrew its IPO application. The exchange's on-site inspection found that Eplus3D's R&D internal controls were not effectively implemented, with time sheets retrospectively compiled and basic historical data incomplete or inconsistent. R&D expense disclosures were inaccurate, with full-time R&D personnel recorded performing production and sales activities, and improper allocations of rent, material usage, and equipment depreciation to R&D costs. Additionally, the exchange found that CITIC Securities failed to adequately investigate close relationships between Eplus3D's shareholders, including potential undisclosed equity arrangements between Hangzhou Lansheng and controlling shareholder Yongsheng Holdings.

This case is a textbook example of the post-SPAC regulatory cleanup pattern now extending to China's domestic capital markets. Eplus3D, a national-level "Specialized and New" small giant enterprise and a significant player in industrial metal AM equipment, attempted a 12.05 billion yuan ($1.66 billion) IPO on the STAR Market in June 2025. The withdrawal and subsequent sanctions highlight that China's securities regulators are applying the same rigorous post-withdrawal scrutiny seen in Western markets, particularly around R&D capitalization - a critical issue for AM companies where development costs are a key valuation driver. The event underscores that the Chinese AM industry's rapid growth is now colliding with stricter governance expectations, especially for firms seeking public listings to fund expansion in metal PBF-LB and other industrial segments.

For the AM industry, this is a sobering reminder that IPO readiness requires more than impressive machine specs and revenue growth. Eplus3D's core issue - sloppy R&D record-keeping and questionable expense allocation - is a common vulnerability among hardware-first AM companies that prioritize engineering velocity over financial discipline. The practical takeaway for other Chinese AM firms eyeing public listings is clear: invest in rigorous internal controls and audit-ready documentation well before filing, or face the same fate. For investors, this signals that China's STAR Market is no longer a soft landing for AM companies with weak governance, and due diligence must extend beyond technical capability to operational integrity.